Statement of Changes in Equity records owner transactions and comprehensive income

Steps:

• Identify purpose: Reconciles opening and closing equity balances, showing profit/loss, other comprehensive income, and owner transactions like dividends.
• Review standard components: Includes net income, OCI, dividends paid, share issuances, but excludes income statement items like revenues or balance sheet assets.
• Evaluate choices: Assume 1 is non-owner item (e.g., asset revaluation not directly), 2 is dividends (owner distribution), 3 is operating cash flow (from cash flow statement).
• Select based on IAS 1: Only item 2 fits as a direct equity change via owner transactions.

Why D is correct:

• Per IAS 1, Statement of Changes in Equity includes dividends as transactions with owners in their capacity as owners, directly reducing retained earnings.

Why the others are wrong:

• A: Includes 1, which is not a standard equity change item.
• B: Excludes 2, but dividends are required.
• C: Includes 3, which belongs in cash flow statement, not equity changes.

Final answer: D